Laying on the current circular on 6th July 2022 in which the Central Board of Indirect Taxes and Customs (CBIC), the refund beneath the inverted duty structure in which the supplier is supplying goods under the concessional notification, the Telangana High Court has rendered the tax department to acknowledge a GST refund claim via the taxpayer.
The applicant, Micro Systems and Services Sole a proprietary made in 2005 and is in the business of assembling and supplying computers and their parts. Under Central Goods and Services Tax Act, 2017, the applicant is a registered person. He is indeed a registered supplier to all the Defence, Research & Development Organisation (DRDO) Laboratories and the related companies in the country. On the basis of the CBIC circular on 31/03/2020, the applicant claimed for the refund was cancelled.
A Coram consisting of Chief Justice Ujjal Bhuyan and Justice C.V.Bhaskar Reddy found that as per GST Circular No.173/05/2022-GST on 06.07.2022. The board specified that the same was not the purpose of paragraph 3.2 of Circular on 31.03.2020 to cover the cases in which the supplier would make the supply of goods beneath the concessional notification along with that the tax rate on the output supply would be lower than the tax rate on the input supply for the identical goods during the identical point of time because of the supply of the goods by the supplier beneath a concessional notification.
The High Court Marked
“Therefore, it has been clarified that in such cases, refund of the accumulated input tax credit on account of inverted structure would be allowed in cases where the accumulation of input tax credit is on account of rate of tax on output supply being less than the rate of tax on inputs (same goods) at the same point of time as per some concessional notification issued by the Government providing for lower rate of tax for some specified supplies subject to fulfilment of other conditions, the Court marked.”
The circular dated 06.07.2022 mentioned above would be transparent, the court ruled that the circular on 6/07/2022 specifies the above clarification, effective from the date when the circular comes into force.
Permitting the applicant, the High Court marked that “If this be the position, then the claim of the petitioner is liable to be re-considered on the basis of the Circular dated 31.03.2020 as clarified by the Circular dated 06.07.2022. Consequently, we set aside the orders dated 04.01.2021 of respondent No.6 and dated 09.04.2021 of respondent No.5. The matter is remanded back to respondent No.6 for re-consideration in terms of the Circular dated 06.07.2022 as extracted above. Let the above exercise on remand be carried out by respondent No.6 within a period of eight weeks from the date of receipt of a copy of this order.”
